Landlord and Tenant – Termination of Assured Shorthold Tenancies

In Spencer v Taylor [2013] EWCA Civ 1600 the Court of Appeal has taken time, once again, to examine the provisions of section 21 Housing Act 1988, a subject dear to the heart of many private and social landlords.

The facts were these. Mr Spencer, the landlord, wished to terminate an assured Shorthold tenancy that he had granted to the tenant, Miss Taylor, on 6 February 2006. The tenancy, not unusually, was for a fixed term of 6 months, expiring on 5 August 2006. The rent was payable weekly, on Mondays of each week. After 5 August 2006, the tenant held over, under what automatically became a statutory periodic tenancy. No further fixed term tenancy was granted to Miss Taylor. This arrangement continued for some time until, on 18 October 2011, the landlord served a notice upon the tenant under section 21 Housing Act 1988. That notice was expressed to expire on 1 January 2012, which was a Saturday.

The tenant argued that, because the weekly periods of the tenancy commenced every Monday, the section 21 notice should have stated an expiry date on (or to use the language of section 21(4) ‘after’) the last date of the period, that is, a Sunday (for example, 2 January 2012). By stating an expiry date on a Saturday, the tenant asserted that the notice was invalid (following the principles decided by the Court of Appeal in the earlier case of Fernandez v McDonald [2003] EWCA Civ 1219).

The Court of Appeal rejected the tenant’s argument, upholding the High Court’s decision that the notice was valid.

In reaching this conclusion, the Court of Appeal focused on the provisions of sections 21(1) and section 21(2) of the Housing Act 1988. Under section 21(1), there are 3 conditions that a landlord must meet to recover possession: (i) The tenancy must have ended (that is, the fixed term in this case); (ii) No subsequent tenancy must have been granted (apart from the automatic creation of a statutory periodic tenancy); (iii) The landlord has given not less than 2 month’s written notice to the tenant.

The Court of Appeal concluded that, as Mr Spencer’s notice had complied with all 3 conditions, it was perfectly valid.

The tenant relied on section 21(2) of the 1988 Act, which states that a notice served under section 21(1) may be served before or on the day the fixed term tenancy comes to an end. The tenant argued that, as the notice served by the landlord was after the fixed term had expired, he could not rely on section 21(1), but had to serve a notice that was compliant with section 21(4) – it was for that reason that the notice was invalid by reason of the earlier decision in Fernandez. However, the Court of Appeal made clear that the wording of section 21(2) was permissive, not prohibitive, and did not prevent a landlord serving a section 21(1) notice after expiry of the fixed term tenancy, provided the 3 conditions are met.

Whilst the Court of Appeal of Appeal in this case did not go quite so far as to suggest that the Fernandez case was wrongly decided, it did express some curiosity as to why the appeal judges in Fernandez were beguiled into examining the wording of section 21(4) when the facts of that case fell squarely into the provisions of section 21(1).

So, how should landlords (and their agents) now approach the preparation and service of a section 21 notice?

If the notice is served during the currency of a fixed term Assured Shorthold, then nothing changes. If, on the other hand, the notice is served after the end of the fixed term, and whilst a statutory periodic tenancy subsists, then landlords should no longer serve a notice under section 21(4) (as has commonly been the practice), but a notice under section 21(1). This will make life easier for landlords, as a section 21(1) notice will not have to comply with the Fernandez principles affecting the expiry date of the notice. The section 21(1) notice, served during a statutory periodic tenancy, may expire at any time after 2 months from service.

This does not make section 21(4) notices redundant. There are still many Assured Shorthold tenancies that are created as periodic tenancies from the outset, particularly by social housing landlords. Notices served under these tenancies will have to be compliant with section 21(4), and hence the principles laid down in Fernandez.

Peter Byfield is the partner responsible for the property dispute resolution team at Wannops LLP.

For further enquiries please contact him on 01243 778844.

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